New ‘color of money’ for DOD software gaining traction, Lord says

By changing the "color of money," DOD will create a software-specific way for contracting officers to buy code. Other changes are coming too.
Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord speaks to the DSI DoD Hypersonic Capabilities Symposium, from the Pentagon, Washington, D.C., July 20, 2020. (DoD photo by Lisa Ferdinando)

The Defense Department‘s continued push to change the way the military buys software with a new “color of money” is gaining traction across the acquisition workforce and earning support from lawmakers, its top acquisition official said Thursday.

Undersecretary for Acquisition and Sustainment Ellen Lord said she is currently establishing pilot programs to test the idea, which would allow contracting officers to purchase software under its own “budget activity,” BA-8, designed for an agile procurement process rather than conforming to existing regulations on spending established for hardware purchases. The ideas for changing software acquisition were brought to the DOD in March 2019 in a Defense Innovation Board study.

Lord added that DOD has support from Congress on authorizing the new budget activity. This news comes as DOD is working on other policy changes and programs to speed up its software acquisition cycle.

“[Software acquisition] policy will reflect a substantial departure from the way of doing things in DOD,” Lord said during a virtual Professional Services Council event Thursday.


Color of money pilots have been talked about since September, with other key regulatory agencies showing support. As the pilot programs become real, Lord said her office will continue to finalize its policy and implementation of the innovation board’s recommendations.

“This is a WAY bigger deal than it sounds like,” Jennifer Pahlka, a Defense Innovation Board member who helped write recommendations for changing DOD’s software acquisition process, previously tweeted about the change.

In January, Lord issued an interim policy memo on changes to software acquisition practices. Lord said DOD is “on track” to replace the interim policy with final guidance soon that will create new pathways to buy code.

“While we are proud of the new software pathways, as an organization we need to continue to learn,” she said.

To ensure contracting officers are versed in best practices, like agile and DevSecOps, the Defense Acquisition University has trained 1,400 personnel in software purchasing in the last two years. That work will continue as policies become permanent and new authorizations kick-in from Congress.


New career tracks for both civilian and uniformed officials are being created specific to software acquisition and development, Lord added. There is an initial “cadre” of software-specific officials in the contracting workforce that has been created as another pilot program. Lord said her office is working with the Defense Digital Service to expand the program as a way to improve recruitment and retention of technical officials, an evergreen need for DOD.

“DOD can be successful at delivering software capabilities,” she said.

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